Hyundai Capital America reached a settlement with service members who alleged in a federal case that the company illegally repossessed their cars while they were actively serving.

The United States argued that the retrieval of service members’ property without a court order violated the Servicemembers Civil Relief Act, according to court documents.

The SCRA is a federal law that specifically prohibits an auto finance or leasing company from seizing an active service member’s motor vehicle without a court order. The service member only has to have made one payment on the vehicle in question before joining the military to qualify for protection under the SCRA.

The SCRA covers active duty members of the Army, Marine Corps, Navy, Air Force, Coast Guard, and members of the Reserve who are on active duty orders, according to the Consumer Financial Protection Bureau. It also covers members of the National Guard who are mobilized under federal orders for more than 30 consecutive days.

Hyundai Capital America is a subsidiary of Hyundai Motor America and Kia America that offers vehicle financing.

Navy Airman Jessica Johnson’s Hyundai Elantra was repossessed by Hyundai’s recovery department around July 30, 2017, according to court documents. She purchased the car in 2014 and enlisted in the Navy 9 months later.

She gave Hyundai Capital America her enlistment orders and requested SCRA benefits, specifically highlighting that her car could not be repossessed while she was deployed.

However, while she was deployed, her account became delinquent.

Johnson says she informed a Hyundai representative in 2017 that she was no longer deployed but still in the military. Shortly thereafter, the employee she spoke to recommended to the recovery department that her car be repossessed, even though the employee included documentation in the formal recommendation that showed Johnson was still on active duty.

Johnson’s car was repossessed soon after, according to court documents. She called Hyundai and left a message explaining that she was still on active duty and should be protected by the SCRA. Hyundai sold her vehicle 3 months later.

The lawsuit claimed that 26 service members’ motor vehicles were repossessed from 2015-2023 in ways that violated the SCRA.

If a service member is unable to attend court proceedings due to their military obligation, the auto finance company has to hold off on repossessing the vehicle, according to Sean Timmons, who practices military law as a managing partner at the Tully Rinckey Law Firm in Texas.

“If you’re a civilian working at McDonald’s and you don’t pay, that’s different,” said Timmons.

Beth Kubala, executive director of the Betty and Michael D. Wohl Veterans Legal Clinic at Syracuse University in New York, explained that any suggestion that the SCRA only protects a service member who is deployed defeats the purpose of the law. Kubala is also a retired lieutenant colonel and JAG officer.

“Think about a service member who does move frequently, who might be ordered for an unexpected month or a year of training or who might be unexpectedly put on orders to deploy,” said Kubala.

A press release from The Department of Justice said the payout will include $10,000 plus “any lost equity” to each service member whose vehicle was repossessed and $74,941 to the government. The settlement also requires Hyundai to train its employees on SCRA benefits.

The Department of Justice claims it has won over $481 million for more than 147,000 service members whose SCRA benefits were violated.

“Members of our Armed Forces should not have to worry about having their cars repossessed while they are in military service,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division, according to the press release.

Hyundai Capital America acknowledged the lawsuit in an emailed statement.

“We have entered into a settlement with the Department of Justice — which specifically does not entail our admission of any fault or wrongdoing,” said Angela Nicolaou, Hyundai Capital America’s manager of brand communication.

She said the company took pride in supporting military service members and is committed to providing “best-in-class” customer service.

Riley Ceder is an editorial fellow at Military Times, where he covers breaking news, criminal justice and human interest stories. He previously worked as an investigative practicum student at The Washington Post, where he contributed to the ongoing Abused by the Badge investigation.

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